Introduction

The global economy remains volatile, with many countries grappling with the aftermath of recessions. This article delves into what officially constitutes the end of a recession and how political influence can cloud the understanding of economic recovery. We explore the varying definitions of recessions across different countries, focusing particularly on the United States and the United Kingdom.

Defining a Recession

One careful and widely accepted definition of a recession comes from the National Bureau of Economic Research (NBER) in the United States. According to NBER, a recession is a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." However, this definition can be nuanced and is subject to interpretation.

The Transition from Recessions

Traditionally, an economy is considered out of recession when the factors that led to a decline in economic activity reverse. However, the specifics can vary considerably. For example, according to Wikipedia, in a 1979 New York Times article, economic statistician Julius Shiskin suggested defining a recession as two consecutive quarters of negative GDP growth, a definition that has largely stuck.

Other significant definitions include a 1.5 to 2 percentage point rise in unemployment within a 12-month period. This highlights the practical and economic importance of monitoring such indicators.

Politically Influenced Definitions

When politicians are involved, definitions and perceptions of economic performance can become distorted. In the United States, the Business Cycle Dating Committee of the NBER provides official dates for economic recessions. Yet, politicians often use these definitions strategically to present an overly positive or negative picture of the economy, depending on who is in power.

For instance, during a period when Democrats are in power, the opposition might argue that the economic recovery is slow or nonexistent. Conversely, when Republicans are in power, they might highlight perceived improvements in the economy. This political influence can affect public perception and policy decisions.

International Context

In other countries like the United Kingdom and the European Union, the definition of a recession is simpler. The UK defines a recession as two consecutive quarters of negative economic growth, as measured by the seasonally adjusted quarter-on-quarter figures for real GDP. This straightforward approach ensures that economic data can be easily monitored and understood.

However, this simplicity can also mislead, as it doesn’t necessarily capture the nuanced economic recovery or growth that may be occurring in specific sectors.

Conclusion

The end of a recession is an important moment for economies. While official definitions can provide clarity, the complexity of economic indicators and the political influence around them can make it challenging to fully understand economic recovery. It is therefore essential to keep a critical eye on the data and definitions used to track economic performance.

Keywords: Economic Recession, Post-Recession Period, Economic Recovery, Political Influence, Recession Definition

References:

Shiskin, J. (1979). Framing a definition of recession. The New York Times. (URL: [insert URL if available]).

National Bureau of Economic Research. (n.d.). Business Cycle Dating Committee. (URL: )